Venture capital activity for healthcare IT remained strong for the fifth quarter in a row, according to a new report from Austin, Texas-based Mercom Capital Group. Mercom reported $194 million from 58 investors going into 37 deals during the third quarter of 2012.
Telcare, a mobile health company that uses cellular machine-to-machine technology to monitor diabetes and other chronic illnesses, landed the biggest deal at $25.5 million. The average size of the deals declined, however, to $5.2 million compared to $10.5 million in the second quarter.
Glowing reports this summer from San Francisco financial services company Burrill & Co., investment banking firm Berkery Noyes, and healthcare accelerator Rock Health had been earlier this month by a market report from Ernst & Young citing companies' greater difficulty in attracting funding.
The Mercom report shows health information management companies leading with $101 million in 20 deals, followed by mobile health ($39 million in seven deals) and social health network companies ($26 million in four deals).
The report also notes 37 M&A transactions in the third quarter; only 10, however, disclosed details. The largest was Roper Industries, which was acquired Sunquest Information Systems, a provider of diagnostic and laboratory software solutions, for $1.4 billion.
Raj Prabhu, managing partner of Mercom, in an interview with Healthcare IT News, credited the federal health reform and data initiatives with boosting the market.
The U.S. Department of Health & Human Services "started making greater amounts of usable health data available," he said. "This has made a whole slew of applications possible, opening up possibilities for companies, consumers and communities to come up with new solutions leading the way to mobile apps, social health networks and other products."